Republic Act 7160€¦ · Republic Act 7160 Unpacking the Local Government Code of 1991 A comprehensive research and up to date evaluation of the Local Government Code of 1991 conducted

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Unpacking the Local Government Code of 1991A comprehensive research and up to date evaluation of the LocalGovernment Code of 1991 conducted by the Local Government Academy

Articles may be used for education and training purposes. When using the articlesfrom this publication, the credit line “Articles from Unpacking the Local GovernmentCode of 1991” should be mentioned somewhere in the publications or learningmaterials.

The Project Team

Project AdvisorDr. Gaudioso C. Sosmeña Jr.

Project ManagerMr. Leovigildo C. Resol

Writers/ResearchersMr. Silvestre Z. Barrameda Jr.Mr. Melchor L. Nacario Jr.

Bibliography and ReferencesMs. Lizbeth A. Jalimao

EditorMr. Simon Peter Gregorio

Cover and Layout designMr. Russel C. Gonzales

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Office of the Presidentof the Philippines

Malacañang

MESSAGE

We took a bold step, and a giant leap, on the road towards local autonomy when Congressenacted into law Republic Act 7160, more popularly known as the Local Government Code of1991. Never before in the history of our country had our local government units been grantedsuch wide latitude of local autonomy than under the provisions of the said law.

This document entitled Unpacking the Local Government Code of 1991 contains awealth of information vital to the on-going programs of strengthening local autonomy and localgovernment units.

I challenge all local stakeholders to increasingly strive for a meaningful, equitable, andsustainable local development as we continue to intensify our efforts in reducing poverty.

Congratulations to the Local Government Academy of the Department of the Interiorand Local Government (LGA-DILG), with the aid of the United Nations DevelopmentProgramme (UNDP) and United Nations Habitat (UN-Habitat) for initiating this relevantand useful document as a tool for our local governments in adopting and implementing the kindof governance we are visualizing for the 21st century.

ALBERTO ROMULO Executive Secretary

Chairman, Oversight Committee on the Local Government Code of 1991

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Department of the Interior andLocal Government

MESSAGE

The enactment of the Local Government Code of 1991 brought about radical reformsin the administration and development of our local government units. In fact, these reforms arein response to the clamor of our people for genuine decentralization and local autonomy.

Hence, it is time for us to look back at the lessons learned on decentralization, recognizethe collective gains and milestones in local governance, and move forward in setting the strategicdirections towards strengthening local autonomy. While the Code may have been in place formore than a decade now, still there is an urgent need for a better understanding and appreciationof the issues and concerns on local administration as well as a unified interpretation of some ofits provisions.

But beyond understanding the provisions, it is also significant that the Code serves asthe tool in creating a difference in the lives of our people who are the ultimate beneficiaries ofdecentralization and local autonomy.

It is in this context that I commend the Local Government Academy for initiating thepublication of a study entitled “Unpacking the Local Government Code of 1991” whichcould be useful for our local and barangay officials in carrying out their respective functions. Atthe same time, I extend my appreciation to the United Nations Development Program and theUnited Nations - Habitat for supporting this initiative.

I am confident that the recommendations incorporated in this publication will go a longway in our quest for excellence in local governance.

Mabuhay ang ating mga lokal na pamahalaan!

JOSE D. LINA, JR. Secretary

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Local Government Academy

MESSAGE

The Local Government Code of 1991, otherwise known as RA 7160, set forth the processof redefining and reinventing the course of Philippine local governance. It has also paved theway towards local autonomy through the decentralization of powers and functions from thenational government to the local government units (LGUs). The existence of the Code for morethan a decade has unleashed the full potentials of the LGUs and its constituents, long heldcaptive by a centralized administrative system. While some LGUs are now reaping the benefitsof devolution with unprecedented developments, others are still hanging on to the clutches ofthe central government.

It is within this context that the Unpacking of Local Government Code of 1991 shallguide the local government units to optimize their maximum capacity en route to sustainabledevelopment. Together with the United Nations development Programme (UNDP), and UnitedNations Center for Human Settlements- Habitat (UNCHS-Habitat), the Local GovernmentAcademy embarked on the arduous journey of reviewing the salient features as well as unearthingthe dark areas of the Code.

In the subsequent pages, readers will find different issues and concerns in theimplementation and interpretation of the aforementioned law. The simplifications and omnibusrecommendations compiled in this document will aid the national government, local authorities,private sectors, civil society groups, and other stakeholders, enabling them to play more effectiveroles in the implementation of the policy. With the incorporation of the Millennium DevelopmentGoals (MDGs) in the analyses and discussions herein, this review will serve as a policy tool inmonitoring and evaluating the Code as basis for proposing amendments on provisions whichare not utilized to its full extent.

It is the hope of the Academy, that this piece of work will find meaning and purposeamong the local government officials, and all stakeholders in making local governments in thecountry effective and viable institutions for national development.

MARIVEL C. SACENDONCILLO Executive Director

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Union of Local Authorities of the Philippines

MESSAGE

Local governance in the Philippines has taken a dramatic turn since the enactment ofthe Republic Act No. 7160, known as the Local Government Code of 1991. The Code hasinjected local governments with vigor and dynamism, creating the environment for innovationsin local governance.

Considered the most substantial legislation ever passed on the subject, the Code hasgranted intense debate and opened opportunities for political clarification, and legislative andadministrative innovation as local administrators and legislators, national agencies, non-governmental and people’s organizations and sectoral groups struggle to interpret the statute inmany ways that protect and further their respective interests. Expectedly, the result is a myriadof decisions, rules, regulations, administrative orders, circulars, opinions, and rulings that interpret,implement and clarify.

The Unpacking of Local Government Code of 1991 fills in a critical void in providinga useful reference on local administration. As a reference material it will serve both nationaland local legislators, administrators and practitioners in the formulation of amendments to theCode. By compiling the recommendation from various sectors, providing simplifications, andciting other reading materials on decentralization, this work shows that there is a need to lookinto the salient features, as well as the dark areas in the Code.

We therefore welcome this research done by the Local Government Academy (LGA)through the support of the United Nations Development Programme (UNDP) and United NationsCenter for Human Settlements-Habitat (UNCHS-Habitat), as a guiding material for the membersof the Union of Local Authorities of the Philippines (ULAP).

GOV. RODOLFO P. DEL ROSARIO National President

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HABITAT

MESSAGE

The United Nations Center for Human Settlements-Habitat (UNCHS-Habitat) is pleasedto be partners with the Local Government Academy in promoting excellence in local governancein the Philippines. Among our efforts in this area is in connection with addressing the issues ofimproving the living environment for all people by attaining the twin goals of “Adequate shelterfor all” and “Sustainable development in an urbanizing world.”

We commend the Local Government Academy-Department of the Interior and LocalGovernment for the sustained effort in inspiring more communities to adapt good governancepractices in their respective areas. With the inclusion of documented best practices, the Unpackingof Local Government Code of 1991 is a fitting legacy that will serve as a guiding instrument forthe promotion of decentralization, and empowerment of the local government units.

We may look forward to seeing this document adapted and utilized by more localgovernments around the Philippines. Further, may this document serve as a valuable materialfor policy makers in their effort to strengthen and deepen local autonomy in the Philippines. Tothis end, the lessons learned and the valuable information contained in this work shall bedocumented and disseminated outside the country to further the exchange of expertise andexperience in support to the Habitat Agenda.

(SGD) NICHOLAS YOU Program Coordinator

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MESSAGE

The Local Government Code of 1991 is one of the most important instrument for thepromotion of decentralized governance in the country.

We at the United Nations Development Programme (UNDP) believe that decentralizinggovernance – from the center to the local communities – is an extremely effective way ofachieving human development particularly of the poor and the most vulnerable groups.Empowering local authorities to carry out their responsibilities brings decision-making closer tothe people and leads to more responsive and effective local government that addresses needs,ensures transparency and accountability and encourages the participation of people at the locallevel. Decentralized governance can address the many challenges involved in ensuring the placespeople live and work are ecologically sustainable and humanly livable.

We welcome this opportunity to be a partner in the publication of Unpacking the LocalGovernment Code of 1991. We would like to commend the United Nations - Habitat (UN-Habitat), the Local Government Academy (LGA), and the other partners involved in thiscollaborative effort for advocating the popularization and optimal use of the Code. It is ourhope that this work will open new avenues to support ongoing efforts to improve the quality oflocal government in the Philippines, and serve as a catalyst for sharing of ideas and experienceswith other countries.

DEBORAH LANDEYResident Coordinator

United Nations Systems Operational Activitiesfor Development in the Philippines

andResident Representative

United Nations Development Programme and

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ACKNOWLEDGEMENT

The Local Government Academy extends its appreciation to theworking team that made the completion of the Unpacking the LocalGovernment Code of 1991 possible - from the Project Advisor, Dr.Gaudioso C. Sosmeña Jr. of the Local Government DevelopmentFoundation (LOGODEF), for his guidance and insights on local autonomygained from his vast experience in matters of local government, to theProject Research Team and the Research, Information and TrainingTechnology Division (RITTD) staff of the LGA who gave time and talent tosee this piece of work to print.

Likewise, we recognize the various institutions particularly the localgovernment leagues, the national government agencies, the academeand non-governmental organizations for their generosity in sharing theirrecommendations and insights so that the 1991 Local Government Codewould be much more understandable and useful to ordinary citizens.

The list will not be complete if the United Nations – Habitat (UN-Habitat) and the United Nations Development Programme (UNDP) arenot acknowledged because they are the ones who principally gaveimpetus to this endeavor.

Without being specific, there are still others who worked to makethis publication possible. We sincerely thank them and we are confidentthat they are one with us in advocating excellent local governance inthe Philippines.

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Unpacking the

CONTENTS1 Introduction

3 Title of the Law

3 Country

3 Language

3 Sphere of Application of the Code

3 Date of Adoption and Effectivity ofthe Code

3 Agency Responsible for the Implementation/Monitoring and Evaluation of the Code

4 Objectives of the Code

5 Areas Being Addressed by the Code

6 Context

8 Substance

18 Process of Formulation of the Code

18 Process of Implementation of the Code

25 Monitoring and Evaluation

26 Results and Impact

29 Good Practices

38 Lessons learned in more than a decade ofimplementing the Code

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42 Next Steps of the of theLocal Government Academy

43 Appendices

47 A. Simplification of Pertinent Provisions of theCode

107 B. Recommendations to Amend the Code

109 B1. League of Provinces of the Philippines111 B2. League of Cities of the Philippines115 B3. League of Municipalities of the Philippines119 B4. Liga ng mga Barangay sa Pilipinas121 B5. Other Sectors131 B6. Common Recommendations137 B7. Summary of Recommendations from the

Various Leagues139 B8. Union of Local Authorities of the

Philippines (ULAP) Organizational Chart

141 C. Bibliography

153 D. Contact Names and Addresses of StakeholdersInvolved in the Review

163 E. Definition of Terms

169 F. Acronyms and Abbreviations

171 G. Project Milestones

172 Author of Submission

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Introduction

This research aims to come up with three vital outputs – a simplification ofpertinent provisions of the Code that need amendments, a collection ofrecommendations from various stakeholders to amend the Code, and ananthology or bibliography on the subjects of local autonomy anddecentralization.

The purpose for simplifying significant provisions of the Code is to make themmore understandable to ordinary citizens, especially the local leaders whoneed to perform their devolved powers and responsibilities with knowledge,wisdom, and resolve. Another goal for simplifying the Code would be topopularize its provisions to allow ordinary citizens to participate more fully inlocal governance.

The collection of recommendations will allow the study to better recognizeand analyze the predicaments that local governments deal with in their dailyendeavors.

The anthology or bibliography will serve as an aid and reference for futurestudies relevant to the Unpacking of the Local Government Code of 1991.

The study began in the second week of September after the formation of theresearch team composed of a senior advisor, a project manager, and twojunior researchers. One of the first activities conducted was the gathering ofrecommendations to amend the Code. Aside from getting recommendationsfrom several existing legislative proposals, the various local government leagues,national government agencies and other stakeholders in policy evaluationwere also consulted. After mapping out the list of experts in matters concerningthe Code, two panel discussions were scheduled. The first experts’ panelmeeting was held on the 29th of October 2003 and the second on the 7th ofNovember 2003. (See Appendix G)

While drawing together the recommendations of the various stakeholders, theresearch team also gathered reference materials on the subjects of localautonomy and decentralization. It should be noted that there are only a fewbooks written on both local autonomy and decentralization.

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After the stakeholders had identified the provisions of the Code that need tobe amended, the research team moved on to the simplification of the saidprovisions.

As a follow-up to the two experts’ panel meeting, a stakeholders’ conferencewas held on the 19th of November 2003 at the Discovery Suites in Pasig City.During this meeting, the initial list of recommendations to amend the Codewere again reviewed and finalized.

The team was able to finish the first draft of the research paper by the first weekof December 2003. The final paper was completed and submitted to the UnitedNations - Habitat) by the second week of December 2003.

As of the moment, this research is the most updated and comprehensive reviewof the Code. The consultations and forums were the first government-initiatedattempt to evaluate and assess Local Government Code.


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Title of the Law

Republic Act 7160 otherwise known as The Local Government Code of 1991.The Local Government Code of 1991 is the Bible or Koran for local governmentadministration in the Philippines.

Country

The Republic of the Philippines.

Language

The Local Government Code was originally written in English. It has since beentranslated into the different local languages of the country to make it accessibleand understandable to ordinary citizens.

Sphere of Application

The Local Government Code of 1991 applies primarily to all local governments– provinces, cities, municipalities and barangays – in the Philippines. It alsoaffects officials, offices, and agencies of the national government as far astheir relationship to the local governments are concerned. The Code does notapply in the Autonomous Region of Muslim Mindanao (ARMM). Being anAutonomous Region, it has its own local government code.

Date of Adoption and Effectivity

The Local Government Code of 1991 was signed into law by the President ofthe Philippines on 10 October 1991. The Code took effect on 1 January 1992.

Agency Responsible for the Implementation/Monitoring and Evaluation

The provincial, city, municipal, and barangay governments are the agenciesprimarily responsible for the implementation of the Code in their areas ofjurisdiction. There are seventy nine (79) provinces, one hundred fifteen (115)cities, one thousand four hundred ninety-eight (1,498) municipalities and forty-


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one thousand nine hundred fifty-nine (41,959) barangays throughout thePhilippines.

Among national government agencies, the Department of the Interior andLocal Government (DILG) is responsible for the implementation, monitoring,and evaluation of the Code. Other national government agencies whosefunctions have been fully or partially devolved to the local government provideassistance when necessary.

Objectives of the Code

Centralism had characterized Philippine political administration since colonialtimes. While the set-up has made it possible for State formation and consolidationin an archipelago of more than 7100 islands, it has increasingly becomeanachronistic or unresponsive to the demands of modern publicmanagement. Recognition of the irreplaceable and privileged role of localgovernment units had grown over the years. This caused the framers of the1987 Constitution to call for the passage of a local government code in Section3 Article X of the 1987 Constitution:

The Congress shall enact a local government code which shall provide for amore responsive and accountable local government structure instituted througha system of decentralization with effective mechanisms of recall, initiative, andreferendum, allocate among the different local government units their powers,responsibilities, and resources, and provide for the qualification, election,appointment and removal, term, salaries, powers, and functions and duties ofofficials, and all other matters relating to the organization and operation of thelocal units.

By expanding the powers and responsibilities of local governments,the Local Government Code of 1991 seeks:

• to provide local government units the opportunity to tap their fullestpotentials as self-reliant communities and as active partners of thenational government in the attainment of national goals;

• to facilitate faster decision-making at the local level;• to enhance the participation of ordinary citizens, organized groups,

and the poorer sectors in the conduct of public affairs and thebusiness of government;

• to deliver basic services more efficiently.


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Areas Being Addressed by the Code

The Local Government Code of 1991 covers all aspects of local governance. Itaddresses the decades-old problem of over-centralized political andadministrative system that concentrated most significant decisions anddevelopment in the Metropolitan Manila Area. The Code consists of five hundredthirty-six (536) sections divided into four (4) books. Book I contains policystatements, principles, processes, and mechanisms for effective localgovernance. Book II covers the taxing powers and other revenue raising powersand the corresponding administrative structures and processes necessary inthe exercise of such powers. Book III details the local government structureand powers and duties of elective officials. Book IV contains the transitoryprovisions that will effect the smooth implementation of the Code.

More specifically, the Local Government Code addressed the following:

• delineated the mandates, powers and functions of provinces, cities,municipalities and barangays;

• vested the local government units with the responsibility to deliver certainbasic services including health, agriculture, social welfare, and aspects ofenvironment and natural resources.

• devolved to local governments the authority to impose certain regulatoryand licensing functions such as the reclassification of agricultural lands,enforcement of environmental laws, inspection of food products andquarantine, enforcement of the national building code, operation oftricycles, processing and approval of subdivision plans, and establishmentof cockpits and holding of cockfights — all which were previously performedby the national government.

• provided the legal and institutional infrastructure for the expanded, activeand direct participation of civil society, non-governmental organizations,people’s organizations, and the private sector in local governance byproviding representation from these groups in local development councilsand in local special bodies.

• empowered ordinary citizens to directly call into account elected officialsand pass legislation outside the regular process of representative democracythrough the process of recall and people’s initiative;


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• increased the financial resources of the local government units by providingthem shares in the national wealth and national taxes by way of the internalrevenue allotment (IRA) and by broadening their powers of taxation.

• enhanced the people’s access to justice and gave them the power tomediate and decide on local disputes without the coercive powers of theState through the Katarungang Pambarangay or the barangay justicesystem.

• laid the foundation for the development and evolution of moreentrepreneurial oriented localities by authorizing LGUs to enter into build-operate-transfer (BOT) arrangements with the private sector.

Context

The Philippines is a democratic state under a unitary system of government. Itis an archipelago with an area of approximately 300,000 sq. km. and apopulation of 81.1 million in 2003. According to the National Statistics Office(NSO), the country has a literacy rate of 92.3 %; gross domestic product (GDP)of $18.82 million; and gross national product (GNP) of $20.214 million.

The country follows a presidential form of government. It has three branchesof government: the Executive, the Legislative, and the Judiciary.

The legislative power is granted to Congress, consisting of two chambers: theLower House known as the House of Representatives, and the Upper House orthe Senate. Each House is constitutionally empowered to propose legislation,and together, enact laws, determine the rules of its proceedings, conductinquiries or investigations, and punish its members for disorderly behavior. TheSenate is an assembly of twenty four (24) Senators elected nationwide and areentitled to serve a maximum of two (2) consecutive six-year terms. On theother hand, the House of Representatives is made up of two hundred fifty (250)legislators. Twenty percent (20%) of the total number of Representatives iselected through a party list system of sectoral parties and organizations, whilethe rest are elected by district. Legislative districts are apportioned among theprovinces, cities, and the Metropolitan Manila area in accordance with theirrespective inhabitants and on the basis of a uniform and progressive ratio. EachRepresentative is entitled to serve a maximum of three (3) consecutivethree-year terms.


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The power to execute the laws is vested on the President who administers theaffairs of the government as Chief Executive. The President is the Head of theState and appoints department secretaries who are his/her alter ego. ThePresident is elected at large by the people but can be removed byimpeachment. The President can exercise veto power over bills passed by theCongress. The President is not eligible for re-election after serving a six yearterm. The Vice-President, on the other hand, is elected through the same manneras that of the President and is also removable by impeachment but may servea maximum of two (2) consecutive six-year terms. The Vice-President takesover as President if the Chief Executive is impeached, dies or is permanentlyincapacitated.

Judicial power refers to the authority to interpret the laws and its constructions.Judicial power is exercised by the Supreme Court, by lower courts, and byquasi-judicial bodies.. The Supreme Court, being the Highest Tribunal, iscomposed of a Chief Justice and fourteen (14) Associate Justices. The powersof the Supreme Court consist of original and appellate jurisdiction, temporaryassignment of judges, the change of venue or place of trial, promulgate rules,appointment of officials and employees, and administrative supervision overall courts and personnel thereof. The members of the Judiciary are appointedby the President according to the qualifications prescribed by law.

A local government under a unitary form of government is an intra-sovereignpolitical subdivision composed by law and possesses extensive control over itsown affairs. It has a dual personality: public or governmental and private orcorporate. In its governmental capacity, it is an agent of the state and of thecommunity in carrying out the functions of the government and in supervisinglocal transactions. As a corporate entity, it can act like a business corporation,performing functions not strictly governmental or political.

The Local Government Code of 1991 is the latest of several attempts todecentralize the State and expand the powers of local governments.

In 1959, the Local Autonomy Act (RA 2264) was passed. This law vested citiesand municipal governments with greater fiscal, planning, and regulatorypowers. Another important legislation was the Barrio Charter Act (RA 2370)that sought to transform the barrios – then the smallest unit of government —into quasi-municipal corporations through the grant of selected taxing powers.This was followed by RA 5185 or The Decentralization Act of 1967 that increasedthe financial resources of local governments and broadened their decision-making powers.


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The imposition of Martial Law in 1972 stemmed, and in several instances, reversedthe tide towards greater local autonomy. Under authoritarian rule, localelections were suspended, and the power to appoint local officials was vestedin the President. Notwithstanding the highly-centralized set-up, the pursuit oflocal autonomy was not abandoned at least on paper. The 1973 Constitutioncalled for policies on local autonomy especially for the barrios and in the areaof fiscal administration. The regime experimented with expanding the powersof local government units through Batas Pambansa 337 otherwise known asThe Local Government Code of 1983. However, the centralizing actions andiron grip of the dictatorship smothered local initiatives.

The 1987 Constitution promulgated after the removal of the dictatorship andrestoration of democracy in 1986 contained provisions assuring autonomy tolocal governments. In the same year, a proposal for decentralization madeby the Department of Local Government led to the organization of a JointLegislative-Executive Committee. The committee was entrusted with the taskof formulating policies on how decentralization and the expansion of localautonomy should proceed.

Substance

The Local Government Code is the most comprehensive piece of legislationyet passed on the subject of local governance. The Local Government Codesought to decentralize the Philippine State. Broadly speaking, decentralizationis the transfer of power and authority from the central institution to the lower orlocal levels of a government system. It assumes three main forms: devolution,deconcentration, and debureaucratization. Devolution refers to political orterritorial decentralization wherein local governments are empowered for self-governance. Deconcentration is administrative decentralization and involvesthe delegation of responsibility of the central government agencies to theprovincial, city and municipality governments and regional bodies.Debureaucratization is also the transfer of public functions and responsibilitiesbut the transfer is made to the private sector and non-governmentorganizations, not to local government units.

As already mentioned, the Code consists of 536 Sections divided into Four Books,dealing with the General Provisions, Local Taxation and Fiscal Matters, LocalGovernment Units, and Miscellaneous and Final Provisions. The Code protectsthe LGUs (Local Government Units) whenever doubts arise on the interpretation


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of its provisions. Thus, any question on the powers of the local governmentsshall be liberally interpreted in favor of the devolution of powers and the LGU.

Through the general welfare clause, the Code provides the LGUs as much poweras necessary, appropriate, or incidental for the promotion of the general welfare.The Code gives local governments powers to ensure the preservation andenhancement of culture, promotion of health and safety, right of people to abalanced ecology, development of technological capabilities, improvementof public morals, economic prosperity and social justice, full employment ofresidents, peace and order, and the convenience of inhabitants.

Creation and Classification of LGUs

The Code provides for the creation of LGUs at the provincial, city, municipal,and barangay levels. Except for barangays, all other LGUs are created byCongressional fiat. Barangays are created by the acts of local legislative bodiesat the provincial and city levels. LGUs are classified according to their annualincome, population, and land area. Philippine cities are categorized either ashighly urbanized cities (HUCs) or component cities. Highly urbanized cities areindependent from the province; component cities remain under the generalsupervision of the provincial government where they are located.

The province as a political corporate unit of government serves as the dynamicmechanism for developmental processes and effective governance of LGUswithin its jurisdiction. It is composed of component cities and municipalities.

The city coordinates development initiatives within its bounds, delivers basicservices and governs the inhabitants within its territory. It is composed of moreurbanized and developed barangays.

Municipalities, on the other hand, function in the same manner as that of thecities, the only difference being that it consists of less developed barangays.The Code defines a barangay as a forum where collective views of the peoplemay be expressed, crystallized and considered, and where disputes may beamicably settled. As a political unit, it functions as the primary planning andimplementing unit of government programs, projects, and activities in thecommunity.


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The head of a province is called a governor. The head of a city or a municipalityis the mayor. Barangay, the smallest political unit, is governed by a barangaychairperson or captain. The governors, the mayors, and the barangaychairpersons exercise administrative and executive powers; legislative powersof provinces, cities, and municipalities are vested in local legislative councilscalled Sanggunians with the Vice Governor and the Vice Mayor as Chair. Amongall local chief executives, the barangay chairperson alone possesses judicialpowers by virtue of his mandate to arbitrate disputes within his territorialjurisdiction.

The Code stipulates the creation of a Sangguniang Kabataan (Youth Council)as part of the local government structure at all levels, barangay, municipality,city, and province. It is a little assembly by itself, a venue for the youth toparticipate in public affairs, and a training ground for higher positions. TheConstitution, through Section 13 Article II, mandates the State to “inculcate inthe youth patriotism and nationalism, and encourage their involvement in publicand civic affairs.”

The Local Government Code also institutionalizes the different leagues, namely:Liga ng mga Barangay, League of Municipalities, League of Cities and Leagueof Provinces.

Devolution of Basic Services

Recognizing the primary role of LGUs in the development and growth ofcommunities, the Code vests them with the powers and functions to deliverservices. Responsibilities in the delivery of certain services including health,agriculture, public works, social welfare, and aspects in the development andconservation of the environment and natural resources and tourism weredevolved to the LGUs by national government agencies.

The Code expressly provides for the delivery of agricultural services to the LGUs.Agricultural support services such as the distribution of planting materials andoperation of collecting and buying stations for farming needs have been placedunder the authority of the barangays. Cities and municipalities are empoweredto implement extensions and on-site research services and facilities related toagriculture and fishery activities, including the enforcement of fishery andenvironmental laws. Provinces, on the other hand, are charged with theprovision of agricultural services and facilities that require more resources andaffect several municipalities.


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The Local Government Code also transfers the functions of the field units of theDepartment of Health (DOH) to the local governments. It provides for thecreation of a Local Health Board at the provincial, city, and municipal levels.The Local Health Board acts as a policy recommending body on the planningand implementation of local health programs. However, the Secretary of Healthis still empowered to temporarily assume direct control and supervision, for alimited period over local health operations in cases of widespread dangers topublic health.

The Code also devolves social welfare services to the LGUs. This involves thetransfer of responsibility from the regional, provincial, and municipal or city districtoffices of the Department of Social Welfare and Development (DSWD) to thelocal governments. Included in the devolved functions are the establishment,operation, and maintenance of various social welfare facilities. Barangays havethe duty to maintain day care centers. The governors and mayors areempowered to carry out emergency measures during and the aftermath ofdisasters and calamities. Programs and projects on rebel returnees are nowthe responsibility of the provinces. The Code entrusts the delivery of socialwelfare and services to local social welfare and development officers.However, it mandates the appointment of only the provincial and city socialwelfare and development officers; appointment of a municipal social welfareand development officer is optional. The appointment of provincial and citypopulation officers is also mandated by the Code.

In the conservation and protection of the environment, the Code states thatLGUs share equal responsibility with the national government. All LGUs, throughtheir local chief executives, are granted considerable powers to safeguardand conserve natural resources within their jurisdictions. Furthermore, it requiresnational agencies or government-owned or-controlled corporations (GOCCs)engaged in projects with significant impact on the environment, to consultLGUs, NGOs, and other concerned sectors prior to the implementation of suchprojects.

Responsibility over certain aspects of tourism promotion and development,telecommunications, and low-cost housing programs are also delegated toLGUs.

The Code empowers the LGUs to exercise control and supervision overinfrastructure facilities funded locally. The Department of Public Works andHighways (DPWH), however, retains responsibility for infrastructure projectsfunded by the national government. To ensure the effective performance of


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this function, the Code requires the appointment of an engineer and architectat the provincial, city, and municipal levels. The school building program isalso delegated to the cities and municipalities.

Lastly, cities and municipalities are obliged to maintain public libraries andinformation services. Provinces are mandated to perform industrial researchand development and investment support services.

By mandating and devolving these functions to LGUs, the Code is operating onthe premise that LGUs can better respond to diverse and changing localconditions better and more efficiently than the national government can. Thereare also greater incentives for LGUs to do this because its officials are closer tothe people and would be held accountable for their success or failure in doingso.

Transfer of Regulatory Functions

The Code also transfers certain regulatory powers from national agencies toLGUs. Under the Code LGUs are empowered to reclassify agricultural lands.The law makes its intention clear by using the term reclassify rather than convertin allowing the Sangguniang Panlungsod or Pambayan (City or MunicipalCouncil) to reclassify and provide for the manner of utilization and dispositionof lands provided that such shall not repeal, amend or modify theComprehensive Agrarian Reform Law (RA 6657). Land is to be reclassified if itceases to be economically feasible for agricultural purposes as determinedby the Department of Agriculture, or if the land shall have substantially greatereconomic value for residential, commercial, or industrial purposes asdetermined by the concerned Sanggunian. The President may upon therecommendation of the National Economic Development Authority (NEDA)increase the percentage limitations on the land to be reclassified when publicinterest requires. The authority of the Sanggunian is limited to the reclassificationof agricultural lands. Such authority does not extend to all other public landssuch as forests or timbers, mineral lands, and national parks, which is theprerogative of the President upon recommendation of the pertinent nationalgovernment agency head.

In the same vein, the Code mandates LGUs to prepare a comprehensive landuse plan (CLUP). The CLUP shall be the LGU’s primary basis for the future use ofland resources. To put the plan into effect, ,municipalities and cities are


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empowered by law to adopt zoning ordinances and regulations. A zoningordinance is a valid exercise of police power to promote the good order andgeneral welfare of the people in the locality.

The Code empowers the Sangguniang Panlungsod and Pambayan to providefor the regulation and inspection of food products for public consumption. Itauthorizes such Sanggunians to regulate the slaughter, sale, and disposition ofanimals. They are also empowered to regulate the construction and operationof markets. The appointment of provincial and city veterinarians is alsomandatory. Furthermore, LGUs are given the power to adopt quarantineregulations to prevent the introduction and spread of diseases.

The Code mandates LGUs to enforce the National Building Code which entruststo the municipal or city engineer the tasks of local building officials. This authorizesthe official to inspect and determine a building’s compliance to the BuildingCode prior to the issuance of building permits. Building officials are alsoempowered to collect fees and other charges which shall accrue to the generalfund of the LGU.

In addition, the local Sanggunians of the city and municipality are authorizedto regulate the operation of tricycles for hire and grant franchises for theiroperation within the territorial jurisdiction of the LGU. The SangguniangPanlungsod and Pambayan may also permit and license the establishment,operation, and maintenance of cockpits. They are authorized to regulatecockfighting and the commercial breeding of gamecocks.

To ensure that the local governments are able to perform their functions, theCode grants them certain governmental and corporate powers pertaining topropriety rights, foreign grants, cooperative undertakings among LGUs, taxexemption privileges of LGUs, credit financing, and inter-LGU loans, grants, andsubsidies. The Code guarantees that LGUs shall enjoy full autonomy in exercisingtheir proprietary functions and in managing their economic enterprise. Itprovides for the disposition, development, lease, obtainment and utilization oftheir own properties and resources for productive and developmental purposes.Consistent with these, LGUs are allowed to commercialize or privatize thedelivery of certain basic services.

The Code also allows LGUs to negotiate and secure financial grants or donationsfrom local or foreign assistance agencies without having to obtain a clearanceor approval for such grants from any national agency or higher localgovernment unit, provided that clearance is secured from the Sanggunian


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concerned. Also, LGUs are permitted to group themselves and consolidate orcoordinate their efforts, services, and other resources for purposes commonlybeneficial to them. A Memorandum of Understanding may be entered into byLGUs. Fund or property contributions may be made upon approval of theSanggunian concerned after conducting public hearings. Contributions shouldnot exceed the LGU’s surplus funds.

To improve their localities and facilities, the Code exempts LGUs from payingtaxes and obligations on imported heavy equipments or machineries that wouldbe used for infrastructure projects. The Code also provides conditions underwhich a local government may extend loans, grants, or subsidies to other LGUs.

NGO/PO and Private Sector Participation andPartnerships with LGUs

Under the Local Government Code, LGU-NGO/private sector cover so wide arange of activities and modes of partnership and collaboration as to be virtuallylimitless. The Code states that LGUs and the said organizations may establishjoint venture and cooperative arrangements in the delivery of basic services,capability-building and livelihood projects, and development of localenterprises to improve productivity and income, diversify agriculture, spur ruralindustrialization, promote ecological balance, and enhance the economicand social well-being of the people. Projects or services that can be the objectof such partnership concern electrification, waterworks, waste disposal, healthservices, etc. Livelihood and economic undertakings may include, amongmany others, agricultural diversification, seminars on various subjects that mayenhance local capabilities, poultry farming, factories, processing of local rawmaterials like seaweeds and precious metals.

In addition, the Code encourages and allows the LGUs to provide financial,technological and other forms of assistance to projects implemented by theseorganizations aimed at attaining and enhancing the economic, cultural andsocial well-being of the community, subject to the approval of the Local ChiefExecutive and the Sanggunian. As provided in the Implementing Rules andRegulations of the Code, an LGU may grant tax exemptions, tax relief andother tax incentives to the said organizations. The Code gives preference toorganizations of the marginalized and poorer sectors of the community likesmall fisherfolk, the urban poor, informal workers. Registered organizations andcooperatives of marginal fishermen are to be accorded preferential treatmentby the Sanggunian in the erection of fish corrals, oyster, mussel or aquatic


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beds and the designation of bangus (milkfish) fry areas within a definite zoneof the municipal waters. They are also accorded preference in the gathering,taking, or catching of fry or any species of fish from the municipal waters. Asidefrom these, cooperatives are given preferential treatment in securing franchises.

The Code further encourages the participation of the private and social sectorsby mandating their representation in the Local Development Council (LDC),Local Prequalification, Bids and Awards Committee (PBAC), Local School Board(LSB), Local Health Board (LHB), Local Peace and Order Council and otherlocal bodies. The Code created the LDC and entrusted it with the task offormulating the socio-economic development plans and public investmentprograms in the locality. The Local PBAC is tasked to conduct theprequalification of contractors, bidding, evaluation of bids, and therecommendation of awards concerning local infrastructure. The Local HealthBoard has the responsibility of advising and assisting the Sanggunian on healthmatters. The formulation of plans and recommendation of measures for theimprovement of the peace and order situation of the LGUs are the duties ofthe Local Peace and Order Council.

Accountability of Local Officials and Citizens’ Initiative

The Code upholds the right of registered voters to institute the process of recallagainst any elective official whose performance has not been satisfactory.The power to initiate recall is vested upon two groups: at least 25% of theregistered voters of the LGU at the time of the election of the official concerned,and the Preparatory Recall Assembly (PRA).

The Provincial PRA is composed of all mayors, vice-mayors, and Sanggunianmembers of the municipalities and component cities within the provinceconcerned who are politically neutral. The PRA handles all the recall resolutionsagainst elective provincial officials. However, when Sangguniang Panlalawiganmembers who are elected by district are the object of recall, the body thathandles the resolution is the Legislative District Preparatory Recall Assembly,which is composed of all elective municipal officials in the district; and in caseswhere Sangguniang Panlungsod members are the object of recall, all electivebarangay officials in the district. All elective barangay officials of the districtcompose the Legislative District PRA of the city where the SangguniangPanlungsod member was elected. The Municipal PRA is composed of allelective barangay officials of the municipality. Finally, barangay recall petitionsmay be initiated by at least twenty five (25%) of the registered voters of the


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barangay who voted in the election that propelled the official being recalledinto office.

The Code empowers registered voters of the local government unit to directlyparticipate in the local legislative process through initiative and referendum.A local initiative is defined as the legal process whereby the registered votersof the LGU may directly propose, enact, or amend any ordinance. It has twoparts: to adopt or enact an ordinance proposed by the initiating petitioner(new ordinance) or to repeal or amend an existing ordinance. Local initiativesare limited in the subject matter and the number of times they can be exercised.It can cover only matters that are within the capabilities and legal powers ofthe Sanggunian to enact. Initiatives in local government can be exercisedonly once a year.

Fiscal Matters

The Local Government Code increases the financial resources of localgovernments since it is impossible to fulfill the wide-ranging powers,responsibilities, and functions without the requisite monetary capability. Thisgranting of fiscal autonomy falls under two categories: locally generated andexternally sourced. The major sources of locally generated income are thebusiness taxes and other local taxes, real property taxes, income from economicenterprises, and fees and charges. The externally sourced income of LGUsconsists of shares in the internal revenue allotment (IRA), proceeds from theutilization and development of the national wealth, loans, credit and bonds,and grants or subsidies. However, the taxing powers of the LGUs are also limitedby the Code.

The power to impose taxes is vested on the Sanggunian. The Code specificallystates that the taxing and revenue-generating powers shall be exercised thoughappropriate ordinances. The Code also realigns the taxing powers anddistributes them to the different levels of LGUs. Provinces retain their tax baseon real property taxation, business of printing and publication, franchise tax,tax on gravel and sand, professional tax, amusement tax, and annual fixed taxfor delivery trucks. However, the power to levy fees for sealing and licensing ofweights and measures, and tax on peddlers have been transferred to themunicipalities. Municipalities retain essentially the same tax measures grantedto the provinces and may continue to levy taxes, fees and charges not grantedto the province in addition to business tax, fees and charges, fees for sealingand licensing of weights and measures, and fishery rentals, fees and charges.Nevertheless, municipalities in the Metropolitan Manila Areas (MMA) may


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impose taxes that exceed the rates prescribed in the Code by not more than50%. Cities share the powers of taxation of the provinces and municipalities.They are not authorized, however, to exceed the rates of taxes on professionaland amusement taxes levied by the provinces or municipalities. Barangaysare authorized to impose taxes on stores or retailers with fixed businessestablishments with gross sales or receipts of PhP50,000 or less in the barangaysin cities and PhP30,000 in the barangays in municipalities. They are alsoempowered to collect fees and charges on service rendered in connection tothe use of barangay-owned properties or service facilities, places of recreationwhich charge admission fees, issuance of business clearance and permits withintheir jurisdiction, commercial cockfights, cockpits and breeding of fighting cocks,and billboards, signboards and outdoor advertisements.

Under the Code, LGUs have the authority to adjust tax rates by a maximum often percent (10%) once every five years to 10%, collect community tax, andgrant exemption privileges. To ensure public participation and accountability,the holding of public hearings is mandatory prior to the approval of taxordinances. The local chief executive has veto power on the ordinanceaccording to the grounds provided for in the Code. It also lays the foundationfor the emergence and development of more entrepreneurial localities. TheCode grants LGUs the authority to enter into build-operate-transfer (BOT)agreements with the private sector .

To enable the LGUs to adapt their organizational structures, the Code authorizesthem to establish an accountable, efficient, and dynamic organizationalstructure and operating mechanism. They are also empowered to establishan organization that shall be responsible for the effective implementation of itsdevelopment plans, programs, objectives and priorities, and design andimplement their own staffing pattern as prescribed by the Civil ServiceCommission (CSC). As part of human resource management, the Codedelineates the role of elective and appointive local officials and other personnel.Systems of incentives and rewards and grounds for disciplinary action andpunishment are also provided there.

The Code is clear in granting the power of review to Congress. Congressionalreview serves as a mechanism to evaluate and monitor the effectiveness ofthe Local Government. The assessment is actually done by two parties. First isthe local electorate that has the ultimate power to elect local public officials.Second is the national government that plays a critical role in the realization oflocal autonomy and decentralization.


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Process of Formulating the Code

The process of formulating the Local Government Code started when thenSenate Chairman of the Committee on Local Governments, Aquilino Q.Pimentel, introduced Senate Bill No. 155. At the House of Representatives, itwas Congressman Celestino E. Martinez Jr. then Chairman of the Housecounterpart committee who introduced House Bill No. 31046. Both bills wereentitled An Act Providing for a Local Government Code.

Although the two bills sought to grant more autonomy to local governmentunits, they differed in the approach and manner of exercising those powers. Along-drawn debate ensued during the deliberations, which lasted until themiddle of 1991 when the Bicameral Conference Committee composed ofrepresentatives from both houses of Congress agreed to recommend theconsolidated version for approval to the larger Senate and House ofRepresentatives.

On 10 October 1991, President Corazon C. Aquino signed into law RepublicAct No. 7160 or the Local Government Code. The Code took effect on 1 January1992.

Relevant and useful recommendations gathered from several studies on localgovernment administration conducted by some universities and otheracademic institutions were used as inputs in the crafting of the Code. Theprinciples and guidelines, as well as most of the provisions of the LocalGovernment Code of 1983, served as the codal framework for the Code. Also,prior to the approval of the Code, the Local Government Committees of bothHouses went through a series of public hearings in the various regions of thecountry. These consultations proved to be very effective in enriching theconcept and principles of local governance. Insights taken from these publichearings were then incorporated into the Code.

Process of Implementing the Code

An Oversight Committee was organized prior to implementing the LocalGovernment Code. The Oversight Committee was composed of the ExecutiveSecretary as the chairperson, the Secretaries of the Department of Finance(DOF), the Department of the Interior and Local Government (DILG) and theDepartment of Budget and Management, three Senators, three Congressmen,


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and the presidents of the different local government leagues as members. TheCommittee’s most significant contribution was the formulation of theImplementing Rules and Regulations (IRR) of the Code. A series ofinterdepartmental consultations were conducted. to rationalize the devolutionof specific functions to local government units.

In 1993, Malacañang issued Proclamation No. 481 entitled Declaring theAdoption of the 1993-1998 Master Plan for the Sustained Implementation ofthe Local Government Code of 1991. Proclamation No. 481 directed theDepartment of the Interior and Local Government (DILG) to come up with aMaster Plan for the effective implementation of the Code. The main objectiveof the Master Plan was to sustain the momentum in setting up a decentralizedstructure of local governance and to promote greater citizen and private sectorparticipation in the development processes of the LGUs.

The implementation of the Code, according to the Master Plan, would havethree phases namely, the Changeover Phase, the Transition Period and theStabilization Phase. The Changeover Phase covered the years 1992 and 1993.It involved the transfer to LGUs of the devolved functions and their correspondingassets and personnel.

The devolution of the basic services and facilities had several repercussions,among them the downsizing of affected national agencies and the capability-building program for LGUs. The funding requirements for these, enumeratedunder the Code, should be provided by the LGUs themselves through theirshare from the internal revenue allotment (IRA) and from their tax and non-taxrevenues. In addition, national agencies were given a time frame withinwhich to devolve to LGUs the responsibility for the services and facilitiesenumerated in the law. A deadline was set to ensure compliance. Devolutionwas accompanied by the transfer of assets and personnel and involved thetransmission of records, equipment, employees and other properties inaccordance with the Implementing Rules and Regulations. Consideration wasgiven to the policy guidelines, rights of the affected personnel, allocation ofpersonal services, time frame for devolution, and absorptive capacity of LGUs.As contained in the Code, regional offices of affected national agencies shouldbe phased out within one (1) year from the approval of the Code.

The second phase, which covered the years 1994 until 1996, was called theTransition Period. During this phase, National Government Agencies (NGAs)and LGUs institutionalized the changes that decentralization had wrought.


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The third and final phase in the implementation of the Code should have beenthe Stabilization Phase. This Stabilization Phase was expected to begin in 1997and continue indefinitely. In this stage, LGUs were to build adequate capabilitiesin managing their local affairs. NGAs (National Government Agencies) wereexpected to provide support and technical assistance to the LGUs as necessary.

The Master Plan had six (6) components namely devolution of basic servicesand regulatory functions, inter-governmental relations, NGO-PO participation,planning and budgeting, revenue mobilization and fiscal matters, and LGUstructures and systems.

Devolution of Basic Services andRegulatory Functions Component

The first component required an action plan to enhance the technicalcapabilities of the LGUs so that they could efficiently manage and implementfunctions devolved to them. In this connection, the NGAs were expected to:

• formulate their respective Medium-Term Decentralization/DeconcentrationPlans to implement their devolved functions;

• provide technical assistance to LGUs and draw up a training program thatsuited the needs of the local governments in delivering basic services;

• set technical standards for LGUs on devolved basic services, to be containedin guidebooks and other user-friendly manuals;

• develop user-friendly How-to manuals or guidebooks on LGU operatingsystems for the use of devolved NGA personnel;

• develop LGU capabilities; and

• assist NGOs, cooperatives and the private sector in developing and applyingcost-effective models for collaborative undertakings relative to theimplementation of the devolved basic services by the LGUs.


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Inter-governmental Relations Component

Under the inter-governmental relations component, action plans should havebeen drafted to implement suitable and principled relations between LGUsand NGAs and between and among LGUs themselves.

On the NGA-LGU relations, concerned NGAs and LGUs should have adoptedpolicies and mechanisms to strengthen their relations in the following areas:

• decentralized approach to formulate national policies, plans, and priorities;

• policies and guidelines which provided for the delineation of responsibilitiesbetween LGUs and the NGA over monitoring and evaluation activities atthe local level;

• provision of technical assistance to the LGUs in areas of local governmentintegrated planning; and

• provision of guidelines delineating administrative authority of the local chiefexecutives over NGA field personnel.

On inter-LGU relations, additional guidelines should have been promulgatedon the settlements of disputes among LGUs and incentives provided for inter-LGU partnerships like grants.

NGO-PO Participation Component

The third component was on NGO-PO participation. In consultation with thedifferent leagues, the Oversight Committee should have developed a simplifiedNGO accreditation system and guidelines on LGU and NGO-PO collaborationon the following areas:

• basic services delivery functions;• local development planning;• public enterprise management;• capability-building;• revenue mobilization;


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• delegation of regulatory function;• BOT-BT projects; and• policy formulation

Planning and Budgeting Component

The fourth component dealt with planning and budgeting. The Code providedthe institutional framework for bottom-up planning. The Master Plan wasexpected to flesh out the elements of the framework. Under this component,LGU budget systems and structures should have been reconfigured and theLGU systems and structures should have been retooled. The Department ofBudget and Management (DBM) and the Commission on Audit (COA) wereexpected to come up with a joint Budget Operations Manual.

Revenue Mobilization and Fiscal Matters Component

Revenue mobilization and budgeting was the fifth component of the MasterPlan. The Code provided the LGUs with more resources and more fiscal powers.Mechanisms and measures should have been provided to assist the LGUs inthe effective and efficient exercise of local revenue mobilization powers.

LGUs generated revenues from their shares in the Internal Revenue Allotment(IRA) and in the national wealth, from local taxation, other sources of revenue,both local and external. Regarding the IRA, steps were expected to be takento address its inadequate distribution. The NGAs were expected to ensure thatthe correct amount of the mandated IRA for the LGUs is included in the annualGeneral Appropriations Act (GAA).

The Code also entitled LGUs to a share in the use and development of nationalwealth in their own jurisdictions. In this regard, NGAs shall undertake the followingmeasures:

• The Department of Finance (DOF), in consultation with the local governmentleagues, was expected to design a system estimating LGU shares in thenational wealth, an allocation scheme and a remittance scheme for suchshares.


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• The DOF, with the assistance of the DILG, was expected to assist LGUs inassessing and collecting their shares in the use and development of nationalwealth.

• The DOF, with the assistance of the DILG, local government leagues, theprivate sector and other NGAs should have designed an effectiveconsultation mechanism for proposed revenue measures, schemes forresolving local tax conflicts, and a monitoring system for LGU tax impositions.

The Code also authorized LGUs to generate funds from alternative sources forits local programs and projects. Ways of doing these were: the issuance of LGUbond, credit financing, BOT scheme and other variants of private-public sectorpartnership. In connection to this, the NGAs concerned and LGUs should have:

• reviewed existing and proposed policies on LGU bond issuances;

• developed policy advisory guidelines for LGUs on the use of loan/creditmarkets;

• drafted policy guidelines on BOT-BT schemes applicable to LGUs;

• issued clear-cut guidelines to operationalize the Code’s provision on theLGUs’ power to levy taxes, fees and charges not otherwise provided in theInternal Revenue Code;

• studied the inclusion of LGU loans in the agri-agra reserves of banks; and

• encouraged the LGUs to enter into an inter-LGU borrowing and subsidies asa non-traditional LGU fund source pursuant to the Code.

Regarding revenue utilization, policies on the property and supply managementand budget systems and procedures responsive to the efficient delivery of basicservices should have been adopted. The concerned NGAs, in consultation withCOA, DBM and DILG, should have undertaken the following:

• formulated policies on supply management responsive to the efficientdelivery of basic services;

• drafted a Budget Operations Manual providing for budget systems andprocedures pursuant to the mandate of the Code;


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• issued a simplified barangay financial operations manual; and

• issued guidelines on the implementation of local infrastructure projects.

Apart from revenue utilization, the Code provided organizational structures foreffective local revenue administration such as the Offices of the Local Accountsand General Services.

The NGAs were expected to set up a support mechanism for effective revenueadministration, provide organization models, and provide guidance on the useof information technology for revenue administration.

In terms of ensuring equity in revenue distribution, the NGAs were expected toconduct policy studies to ensure equitable allocation of IRA and the IRA shareof newly created LGUs.

LGU Structures and Systems Component

The sixth and last component of the Master Plan concerned LGU structuresand systems. With the vast powers and functions devolved to the LGUs, thedevelopment of skills and capabilities of the LGU and local government officials,both elective and appointive, was essential. Under this component, thefollowing measures had been identified to strengthen the capabilities of thelocal officials, local government structures and systems:

For Local Officials:

• development of a special curriculum for local officials;• conduct of general and specialized trainings for the local officials and

staff;• establishment of internship programs among LGU officials and key

personnel;• conduct of an information/education drive on the need for quality and

competent local officials during local elections;


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Local Structures/Systems:

• upgraded the capabilities of the barangays and its support structuresthrough technical assistance, an incentive system and the introductionof a barangay classification system;

• promoted salary sharing arrangement between LGUs and NGA,especially for vital services;

• implemented nationally-mandated wage and non-wage benefits; and• issued supplemental guidelines on the scope of responsibilities of the

LGUs on the devolved regulatory functions.

Monitoring and Evaluation

Monitoring and evaluation of the Code’s implementation have been donesporadically and periodically. Most evaluations are project-based and sector-focused. Evaluations of the Code’ s implementation has been done by foreign-assisted projects devoted to Local Government Administration. Non-governmental organizations (NGOs), universities, and research institutions havealso done studies on the limitations, issues, and problems in implementingRepublic Act 7160. In general, the evaluations done were piece meal inapproach and were not comprehensive enough to provide an accurateassessment on how the Local Government Code has been implemented sofar.

The Department of the Interior and Local Government (DILG), the leaddepartment in tracking the implementation of the Local Government Code,has not established a formal monitoring system. The Department of the Interiorand Local Government is developing indicators to determine and evaluatelocal government performance based on their mandates. The AsianDevelopment Bank and the Canadian International Development Agency arecurrently assisting the DILG in developing the said performance measurements.The initial result of the current formulation on performance indicators will befield tested on March 19 2004.


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In addition to developing an administrative and technical instrument forevaluating local government performance, it is imperative that the LocalGovernment Code of 1991 be also evaluated along the policy areas of localgovernance. The Code can be assessed along the following suggestedconcerns:

• To what extent does the Code achieve broad political objectivesmanifested in achieving political stability, mobilizing support andcooperation of non-governmental organizations (NGOs) and localcommunities for specific national development policies?

• To what extent does the Code increase administrative effectiveness inpromoting greater cooperation among units of the national and localgovernments, including NGOs which share the same developmentgoals?

• To what extent does the Code promote economic and managerialefficiency that allow governments at both central and local levels toachieve development goals in the most effective manner?

• To what extent does the Code increase government responsiveness tothe needs and demands of various interest groups within the society?

• To what extent does the Code contribute to greater self-determinationand self-reliance?

Results and Impact

As borne out by the evaluations conducted, some of these results and impactof the Local Government Code are as follows:

Local Finance

Local governments are increasingly looking at credit finance options. Wherebefore local governments traditionally relied on their internal revenue allotment(IRA) and local taxes to generate finances, they have now begun to exploreborrowing from banks, both government and private, to finance localdevelopment efforts.


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Even if local governments have begun to explore borrowing directly from banks,there has been a prudent and conservative attitude, especially among lowerclass local governments, to borrow, considering the inability of other localgovernments to meet their financial obligations.

Local governments have become more innovative in maximizing localresources through mechanisms such as BOT arrangements, joint ventures, bondflotation.Several cities, in an attempt to initiate development in their areas,have floated city government bonds designed to fund both infrastructure andeconomic related projects. Greater exercise of taxing powers has also becomeevident although efficiency is poor in the collection of some taxes like on realproperty. Local governments have also increased their local investmentinitiatives.

While local governments appreciate the continuing importance of the IRA,they have stepped up efforts and explored options to access external sources,such as the Official Development Assistance (ODA) and getting their rightfulshare from national wealth located within their jurisdiction.

Inter-Local and Local Government-Private SectorCollaboration

Collaboration and cooperation among different levels of government havebecome more apparent.

Horizontal and inter-local cooperation among same level local governmentshas increased.

In terms of local-national government cooperation, local governments havebegun to take ownership of appropriate national programs implemented inthe area, where before these were seen as impositions by the nationalgovernment.

The various leagues of local governments have become more active andinvolved in national issues as well as in providing services to their members.


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Private Sector Participation in Local Governance

Local government-private sector partnership has improved. Where before localgovernments tended to carry out development efforts on their own, now theyhave become more open to seeking out partnerships with the private sectorfor effective governance.

Mechanisms for civil society participation in local governance have begun tobe institutionalized.

Local Organizational Development andHuman Resources Development

Local governments have explored innovative ways in organizationaldevelopment.

Local governments have not invested enough in comprehensive humanresources development (HRD) concerns. When the financial pinch hits, it isusually HRD and training concerns that are first sacrificed

Be this as it may, the appreciation of local government officials for training hasgrown as they become increasingly aware of the complexities of localgovernance. Moreover, there is increasing appreciation for innovations andreforms in public management.

Environmental Management

Several projects and programs on the management of solid wastes, likeOlongapo City’s Color-Coded Drums and Naga City’s Action Planning forIntegrated Solid Waste Management, have already been implemented.

Efforts to preserve the country’s coastal resources have increased. The PanguilBay Integrated Area Development Program and the Kalibo MangroveReforestation Project are good examples of these efforts.

LGUs have become increasingly concerned about watershed managementand reforestation as illustrated by the Bukidnon Greenbelt Buy Back Programand Baguio City Eco-Walk Program.


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Good Practices

Its weaknesses notwithstanding, the Code still has created positive impact onlocal governance and the quality of life of people and communities asevidenced by the many innovative practices of the various local governmentunits in the country. By providing more power, authority, accountability andresources, the Code has transformed LGUs into self-reliant communities andpartners in attaining national development goals. Many LGUs have creativelyand effectively addressed everyday issues and concerns particularly themanagement of the environment, the economy, and the overall well-being ofpeople.

In recognition to these meritorious efforts and exemplary practices, incentivesand rewards are granted to these pioneering local governments. The winnersof the Galing Pook Awards initiated by the Local Government Academy-Department of the Interior and Local Government (LGA-DILG) and the AsianInstitute of Management (AIM), and other similar programs, such as the Healthand Management Information System (HAMIS) Awards of the Department ofHealth and the Konrad Adenauer Medal of Excellence of the Local GovernmentDevelopment Foundation (LOGODEF), all attest to the emergence of creativeand innovative local governments in the country.

These best and good practices prove that devolution of powers can result ingood governance. They have shown that local governments can make adifference given adequate powers and resources.

The Local Government Academy, the training arm for local governments, hascompiled about 15,000 nominations, and selected hundreds of winners for theGaling Pook Awards for the past years. It selected the successful LGUs basedon the following criteria: effectiveness of service delivery; positive socio-economic and/or environmental impact; promotion of people empowerment;and transferability. Moreover, a total of five hundred (500) LGUs are recipientsof awards conferred by award giving bodies such as the LOGODEF, HAMISand the like.

The following are samples of practices by local government units that havedemonstrated innovativeness, creativeness, and initiative. They are classifiedunder the following areas: Local Resource Generation, Inter-Local Cooperation,Private-Public Partnership, Social Welfare and Health Services, EnvironmentalManagement, People’s Participation, and Livelihood Generation.


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VICTORIAS HOUSE BONDSVictorias, Negros Occidental

Victorias House Bonds is a project initiated bythe local government of Victorias in NegrosOccidental to address the problem of housingamong the municipal and national governmentemployees.

The first option was to acquire loans from banksand other credit institutions but such move wouldcost a great deal of money just paying for theinterest. A suggestion from the Home InsuranceGuaranty Corporation (HIGC) brought about theidea of resorting to flotation of bonds. Feasibilitystudies conducted by the local governmentshowed that the latter financing option proved tobe more practical than the former in terms ofcost.

The bonds were to be secured by real estateowned by the local government of Victorias.Each bond had a term of four (4) years withinterest amounting to ten percent (10%) perannum. Aside from PAG-IBIG, the bonds werealso sold to local investors. The project wasmanaged by a Project Governing Board (PGB)chaired by the mayor of Victorias, while NegrosEconomic Development Foundation (NEDF) wasthe appointed developer of the housing project.

Aside from the proceeds from the flotation ofmunicipal bonds, Victorias was also able tosolicit financial support from the provincialgovernment. The Victorias Water District alsovolunteered to shoulder the cost of labor andmaterials for the installation of the water system.The Victorias Rural Electrification ServiceCompany (VRESCO), on the other hand, tookcare of half of the cost of labor for the installationof the electrical system and doled outPhP311,000.00 worth of materials. Studentsand civic organizations also got involved byplanting trees and ornamental plants in the site.

Because of its innovative schemes and thecooperation of its constituents, the localgovernment of Victorias was able to redeem thebonds in time while providing homes to onehundred forty-six (146) families.

Local Resource Generation

Local government units will requireresources to fulfill the wide-rangingpowers, functions, and responsibilitiesgranted to them. Thus, the Codeprovides LGUs with the capability togenerate the necessary capital anddefines the operating principles,systems,, and processes to ensurethat LGUs will utilize these resourcesin an efficient, effective andaccountable manner. However, thedevolution of responsibilities to localgovernment units should beaccompanied by the provision ofreasonably adequate resources sothat LGUs can discharge theirpowers and effectively carry outtheir functions.

The Victorias experience shows howa local government responded tothe housing needs of its constituentsby floating bonds. Through thePabahay Municipal Bonds, the LGUwas able to address the perennialproblem of lack of funds to supportmass housing. It showed how localleadership greatly affects the destinyof the local governments bypracticing good urban governance.Feasibility studies, planning, andinputs from the experts on the relatedfield are also crucial.


Republic Act 7160

Inter-Local Cooperation

Towards the general objective ofpromoting efficiency andresponsiveness in localgovernance, Section 33 of theCode allows and encouragescooperative undertakingsamong local governments.Many local government unitshave entered into cooperativeundertakings with one anotherto attain common objectives.The experiences of localgovernments in this areademonstrate how sharing ofresources can lead to theefficient delivery of basic goodsand services and the enhancedcapacity of LGU personnel.

The Bulacan experience showshow development can beachieved through the clusteringof efforts and resources of thedifferent municipalities in thearea. They have responded tothe challenges of anincreasingly complex world bythe sharing of expertise, poolingfinancial resources, commonproblem solving, and coaching.

PUSHING DEVELOPMENT THROUGHCOOPERATIVISMBulacan’s Kaunlaran Para sa PagkakaisaProgram

Interlocal cooperation is provided for in Section 13,Article 10 of the 1987 Constitution and Section 33 ofthe Local Government Code of 1991 (R.A. 7160).

The project on Interlocal Cooperation among thetwelve (12) municipalities in the Province of Bulacanwas started under the initiative of the provincialgovernment in cooperation with the LocalGovernment Development Foundation (LOGODEF).The mayors of the twelve (12) municipalitiesorganized themselves into a Conference of Mayors(COM) which provided policy guidelines for theinterlocal team to operate as sectoral specialistsdesigned to improve the performance of thebureaucracy of the twelve (12) participatingmunicipalities.

The primary aim of interlocal cooperation is toimprove bureaucratic performance in the twelve (12)pilot municipalities. The members of the Inter-Municipal Team (IMT) are specialists in legislation,local finance, environmental management,organization and personnel. They are employees ofthe municipalities covered by the project.

The COM signed a Memorandum of Agreement(MOA) authorizing the personnel of their respectivemunicipalities who were members of the IMT to movearound the twelve (12) municipalities and to sharetheir expertise in resolving problems in localgovernment administration identified by the team.

Each municipality involved in the project contributedan amount of PhP50,000 a year. This amount isdeposited in trust to the LOGODEF account. Theprimary purpose of the account is to pay thetransportation allowances and honoraria of the IMTmembers.In the twelve (12) years that this InterlocalCooperation has existed, the members of the IMThave now graduated from the first generation stage tothe third generation. At the third stage, the IMT, underthe auspices of the provincial governor and supportedby the Sangguniang Panlalawigan through anexpressed SP resolution and policy circular of theGovernor on the subject, is now providing services to


Republic Act 7160

STARTING ANEW THROUGH THEBUILD-LEASE-TRANSFER SCHEMESan Jose De Buenavista, Antique

When fire gutted the public market of SanJose de Buenavista, Antique in May 1993,the local government was faced with theproblem of financing. Two optionspresented themselves:

1) The Build-Operate-Transfer (BOT)Scheme; and

2) Credit Financing from the banksusing a portion of the municipality’sInterna Revenue Allotment (IRA) ascollateral.

The municipal government however,immediately rejected the second option.Using the IRA as collateral would mean lessmoney for other concerns such as publicservices.

Under the terms of the Build, Lease, andTransfer Scheme, the stall holders wouldshoulder a portion of the construction cost.In exchange, the stall holders areguaranteed a 25-year lease contract.During the said period, the LGU wouldcollect only PhP1.00 per square meter asrental. Added to this, the rental fee mayonly increase by a maximum of threepercent (3%) every year. In aMemorandum of Agreement (MOA)between the local government of San Joseand the stall holders, it was also establishedthat the latter would have the right to occupytheir respective market spaces regardlessof changes in the LGU’s leadership.

Although income from the Business ParkSpace Rentals went down, it wascompensated by the steady increase inbusiness taxes. Over all, the schemeproved to be very effective and beneficial tothe municipality of San Jose De Buenavista,especially to those whose livelihood heavilydepended on the public market.

Private-Public Partnership

Economically transforming an areainvolves many considerations andstakeholders. Local transformationremains the primary role of the privatesector, while the LGU plays a regulativeand supporting role. The Coderecognizes the relevance of the privatesector in local governance andfinance. The said law also provides forvarious ways of credit financing such asthe build-operate-transfer scheme(BOT), floatation of bonds, and otherforms of indebtedness, grants, andloans.

The above experience of San JoseMunicipality shows the financing optionsavailable to LGUs. It demonstrates howLGUs can exploit the BOT Law for thebenefit of its constituents.


Republic Act 7160

Social Welfare andHealth Services

One of the primary features of theCode is the devolution of socialwelfare and health services. This hasbeen a formidable challenge tomany LGUs.

The above example shows howimportant social security,empowerment, equity, andaccountability are in urbangovernance. It highlights theimportance of critical thinking andcreativity in managing theperennial pr

Documents

Republic Act 7160€¦ · Republic Act 7160 Unpacking the Local Government Code of 1991 A comprehensive research and up to date evaluation of the Local Government Code of 1991 conducted